Hong Kong’s biotech listings initiative struggles to take off

Author: Karry Lai | Published: 24 Jan 2019

Since Hong Kong launched its new listings regimes for
companies with weighted voting rights and pre-revenue biotech
companies in 2018, a number of Chinese companies have made it
their venue of choice for an initial public offering (IPO). But
stock prices have not performed well.

Observers believe that Hong Kong has room to improve when it
comes to the valuation of new economy companies, which is
damaging performance in the secondary market. Valuations have
been too high, according to some market participants.

While it’s important for Hong Kong to remain an
attractive environment for companies to list, market
participants fear that comes at the price of waning regulatory
standards.

For instance, the jurisdiction has a high proportion of
retail investors – higher than that in the US
– yet no class action system.

Jenn-Hui Tan, head of capital markets and corporate
governance at Fidelity International explained that for
pre-profit biotech companies,...